WhiteHawk Energy to Acquire PHX Minerals for $187MM

WhiteHawk Energy and WhiteHawk Income Corporation have entered into a definitive agreement to acquire PHX Minerals Inc. in an all-cash transaction of $4.35 per PHX share, for a total of approximately $187 million, including its debt.

Through the acquisition, WhiteHawk will add approximately 1.8 million gross unit acres of premier natural gas mineral and royalty assets, significantly expanding its footprint in the core of the Haynesville Shale in East Texas / North Louisiana and diversifying its portfolio into the SCOOP / STACK region in Oklahoma, the company said in a news release.

After the close of the transaction, WhiteHawk will own royalty interests across approximately 3.1 million gross unit acres, with cash flow from approximately 10,163 producing wells, 368 wells-in-progress, 330 permitted wells and more than 7,250 undeveloped locations across its portfolio, on a pro forma basis, according to the release.

The transaction is expected to close early in the third quarter and is subject to customary closing conditions, including the tender into the offer of a minimum amount of PHX’s common stock and other conditions as set forth in the merger agreement. Following the completion of the transaction, PHX will no longer trade on the New York Stock Exchange, WhiteHawk said.

WhiteHawk said it plans to finance this transaction with a combination of new equity and additional debt under its existing senior secured notes.

“We are excited to announce this transaction with WhiteHawk, which will provide compelling and certain value to all PHX stockholders,” PHX President and CEO Chad Stephens said. “PHX’s Board of Directors conducted a robust strategic alternatives process to maximize value for our stockholders, and we unanimously determined the transaction with WhiteHawk achieves this objective. This transaction is also a testament to the PHX team’s work to evolve our business and build a best-in-class natural gas minerals portfolio, and I thank them for their dedication”.

“The WhiteHawk transaction represents the culmination of our mineral only strategy which we embarked on in early 2020,” PHX Chairman Mark Behrman said. “The Board of Directors commends the management team for the successful transition of PHX’s business strategy over the last five years and the value created over that period of time”.

“The acquisition of PHX is a significant milestone that more than doubles our gross unit acre footprint and producing natural gas wells in highly established basins with some of the country’s largest natural gas producers,” WhiteHawk Chairman and CEO Daniel Herz said.

“PHX will allow us to expand our presence in the core Haynesville Shale and enter the SCOOP / STACK as well. Combined with our current 1.35 million gross unit acres in the core of the Marcellus Shale and Haynesville Shale, we will have meaningful exposure to the top natural gas basins in the United States. PHX’s assets are underpinned by over 6,500 producing wells and significant undeveloped inventory that will increase and diversify our cash flows while providing potential upside. This transaction reflects our strategy to grow with assets that provide cash flow generation with no capital expenditures,” Herz added.

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